Cheque Truncation System

Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project undertaken by the Reserve Bank of India – RBI, for faster clearing of cheques. CTS is basically an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically.

Truncation means, stopping the flow of the physical cheques issued by a drawer to the drawee branch. The physical instrument is truncated at some point en route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc.

Cheque truncation, would eliminate the need to move the physical instruments across branches, except in exceptional circumstances. This would result in effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing, etc., thus speeding up the process of collection or realization of cheques.

Status

The Reserve Bank of India first implemented CTS in National Capital Region, New Delhi from 27 December 2007 with 10 pilot banks and the dead line was set as 30 April 2008 for all the banks. This was followed by launch of CTS in Chennai on 24 September 2011. After migration from MICR to CTS the traditional MICR based cheque processing was discontinued in NCR and Chennai.

Based on the experience gained and the benefits that would accrue to the customers and banks, it was decided to operationalise CTS across the country. Starting 1 August 2013 only CTS-2010 compliant cheques would be accepted for clearing. On 17 July 2013 the RBI extended the deadline to 31 December 2013.